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Business News/ Politics / Policy/  US rejects demand for SSM to protect poor farmers
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US rejects demand for SSM to protect poor farmers

Move could derail the conclusion of the Doha Development Agenda negotiations by the end of this year

SSM, the G-33 group of countries argue, is meant to respond to import surges and price declines that threaten small, subsistence farmers who overwhelmingly reside in the rural areas. Photo: Ramesh Pathania/MintPremium
SSM, the G-33 group of countries argue, is meant to respond to import surges and price declines that threaten small, subsistence farmers who overwhelmingly reside in the rural areas. Photo: Ramesh Pathania/Mint

Geneva: The US on Thursday rejected a demand for a special safeguard mechanism (SSM) that aims to protect resource-poor farmers in developing countries from unforeseen surges of agricultural imports, a move that could derail the conclusion of the Doha Development Agenda (DDA) negotiations by the end of this year.

Indonesia, India, China, the Philippines and Turkey, Barbados on behalf of the ACP (Africa, Caribbean, and Pacific) coalition, and Lesotho, coordinating the African group of countries, maintained that the SSM is crucial for concluding the DDA negotiations.

World Trade Organization (WTO) director general Roberto Azevedo convened a meeting of select trade envoys to discuss the SSM and whether there is a common ground on creating such a mechanism in the final Doha agriculture package.

But the US stated that the demand for SSM will not fly because of the attempts to lower the level of ambition in the market access for agricultural products, said people familiar with discussions at the meeting who spoke on condition of anonymity.

The US also suggested that SSM can only be discussed as part of market access negotiations, implying that there is no need for SSM when the level of market access in the Doha negotiations is being recalibrated.

Except one country, all other members are ready to negotiate SSM, said Indian envoy Anjali Prasad, according to people familiar with the development.

As attempts to draw up the post-Bali work programme by end-July are gathering pace, the hardline US stance raised fresh doubts whether the DDA negotiations can be concluded with the developmental outcomes as promised in the mandate.

Since the launch of the DDA negotiations in 2001, a large majority of developing countries in Asia, Africa, and the Americas consistently demanded SSM on grounds that it is vital for resource-poor farmers to counter the unforeseen surges in imports of agriculture products.

In the failed 2008 ministerial meeting, India’s then commerce minister Kamal Nath maintained that without a credible SSM, India will never sacrifice the interests of its poor farmers.

On behalf of the 47-member G-33 coalition, Indonesia led the charge for a “simple, operable, and effective safeguard mechanism" to ensure that farmers in developing countries are not undermined by volatile supplies from countries that provide billions of dollars of trade-distorting domestic subsidies.

SSM, the G-33 argued, is meant “to respond to import surges and price declines that threatens small, subsistence farmers who overwhelmingly reside in the rural areas, and food security." SSM calls for imposing special safeguard measures when imports cross agreed benchmarks either in volume or in prices.

During the meeting, Indonesia’s trade envoy Iman Pambagyo made a strong case for SSM on several grounds. The Indonesian envoy said it is wrong to link SSM with market access, saying that regardless of the level of ambition, farmers in developing countries need a mechanism to face harmful surges of imports of agricultural products.

Pambagyo said the mechanism will only be triggered based on most current market realities involving sudden drop in prices or a precipitous increase in volumes of imports over a period of three-year rolling average.

The G-33 has proposed a volume trigger of 110%, 115%, 135%, and above for imposing special safeguard duties. It has argued that “the 3-decade-old fixed reference price of 1986-88 is undoubtedly outdated and flawed economic basis for triggering the price mechanism in today’s realities".

The Indonesian envoy suggested that SSM will only be applied for a limited range of products with sunset provisions that would terminate the measure after a specified time period.

India’s trade envoy Prasad suggested that SSM is a critical developmental benchmark for developing countries in the Doha Round.

While the US strongly opposed SSM, it is currently availing what is called the special safeguard (SSG), which was specifically carved out by the industrialized countries in the previous Uruguay Round of negotiations.

The US applied SSG duties, since 2010, on 29 tariff lines while the European Union applied on 15 tariff lines and Japan on 16 tariff lines.

Norway, which is a strong user of SSG, has suggested that developing countries opt for a modified-SSG instead of SSM, according to farm trade negotiators.

The G-33 coalition said SSG is “hardly accessible and ineffective in addressing import surges or price depressions due to its complicated and outdated design and assumptions". SSM “was and is always intended to be a more simple, accessible and effective instrument than the SSG", according to Indonesia.

Except the US, other industrialized nations such as Australia and New Zealand, and the European Union expressed concern about the need for SSM, but suggested they are willing to discuss options from the G-33 group.

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Published: 30 May 2015, 12:46 AM IST
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